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Analyst Meet / AGM - Analyst Meet

FPO will raise about Rs 6000 crore for the company and about Rs 2000 crore for Government

Power Grid Corporation

25-Oct-2013, 06:23
Power Grid Corporation held its analyst meet on 24^th Oct'13, which was addressed by Mr. P Nayak, CMD

Key highlights

For Q2 FY'14, Power Grid reported 30% increase in net sales to Rs 3999.49 crore on y.o.y basis and PAT was up by 10% to Rs 1243.15 crore. Transmission income grew by 25% y.o.y to Rs 3713 crore, consultancy income, including sale of products, grew by 300% to Rs 213 crore ( this includes sale of products of Rs 157 crore as compared to Nil for Q2 FY'14), while telecom income grew by 25% to Rs 73 crore.

As on Sep'13, Power grid owns and operates transmission network of about 102109 ckm of transmission lines and 172 EHVAC and HVDC substations having transformation capacity of more than 172378 MVA with availability of its transmission network of more than 99.9% and it wheels about 50% of total power generated in the country.

Company's average monthly billing is about Rs 6708 crore and its realization is almost 100%. As on date, the outstanding is equivalent to less than 2 day's billing. As on date outstanding of Rs 210 crore is held up due to court cases and the company already has received the order in its favor and same will be cleared in installments.

Management's continuous focus is to reduce the gap between the capex incurred and assets being capitalized. About 45% of the existing asset base of 87107 crore is capitalized in past 24 months.

In terms of consultancy business, 6 new orders came in from 6 clients of which 1 are government orders and rests are private. About Rs 10800 crore worth of project orders are under execution at various stages. Internationally, in consultancy business, company received 2 new orders and increased its reach to 14 countries.

As per the management, the company plans to sell 17 per cent equity, through the FPO route, out of which the government share will be around 4 per cent and the rest 13 per cent will be fresh issue of equity shares to the extent of 13 per cent of the pre-issue equity capital worth around Rs 6,000 crore. The government will mope up around Rs 2000 crore. Post FPO, government stake will come down to 57.9% and as per the management, the FPO can happen by Nov'13 end.

As per the management, capex target for every year in 12^th 5 year plan is increased from Rs 20000 crore to Rs 22500 crore. In FY'14 till Sep'13 about Rs 7075 crore is being added so far. Further, green energy corridors have been approved which would require further investments. Also intra state grid projects in Orrisa and Bihar requires about Rs 9000 crore and after the Grid failure that was seen in last year, a dynamic compensation grid failure plan came out which requires another Rs 2500-3000 crore. For the overall 12^th 5 year plan, the projects approved worth stands around Rs 110000 crore.

As per the management, it had two options, either to grow slowly and don't take new projects, or to receive funds and start bidding for new projects. It went for the later and hence the requirements of funds came in. However, management further reiterated that even if the funds would not have been raised, company through its strong internal accruals and cash flow will be able to manage the show. But since the Government and Ministry have approved the same, it is ready for the FPO as well.

For FY'14, management targets to add 12000 GW ckm, 40000 MVA of substations and 4200 MW of inter regional capacities.